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Topic Review (Newest First)

06-25-2012 03:51 PM

Stumble

Re: State Registration of Documented Vessels

Sail life,

I currently am a titanium salesman, though I also have a JD and am bar certified in Louisiana. And worked as an attorney for years, before I realized I hate the practice of law and moved on.

in Louisiana the resale of a boat between private parties (ie not a broker, or retail shop) is considered a 'casual sale'. Which means no sales tax is owed on the second sale. Technically you actually have to get the department of revenu's blessing on the sale, but it is a simple formality unless they contest the sale as a simulation, or one of the other exceptions to the casual sale rules.

d. It is not the intention of this Chapter to impose a tax on an isolated or occasional sale, frequently termed a casual sale, except with respect to the sale of motor vehicles, which are specifically cov- ered by R.S. 47:303(4). The primary consideration in determining whether a sale meets exemption requirements is whether the seller is in the busi- ness, or holds himself to be in the business, of selling merchandise or tangible personal property of similar nature, and not solely upon the fre- quency of the transactions

Due to the legal nature this conversation has taken... The above should not be construed to be legal advice, but is of a general nature. Only upon specific review of your facts and situation, and with consultation by a tax law expert can your particular tax liability be determined.

06-25-2012 08:53 AM

sea_hunter

The problem here is the confusion over the named tax. Sales tax, is applied when the object is sold and to be transfered between two or more parties. Use tax, is ambiguous and can be applied for any number of reasons but mainly covers the ground between sales and property tax. Property tax comes into play in two ways; one as tangible property or asset, the other as real property. Most juresdictions only want to make sure their sales taxes are paid and will verify that the taxes are paid in the sale state if the owner have moved. Sales tax can only be charged once per item per owner (vessels, vehicles and property) so if a state has the opportunity to collect the calculated tax ahead of another they will. Many states work in concert to reciprocally collect taxes due.

06-25-2012 08:00 AM

smurphny

Re: State Registration of Documented Vessels

Minniwaska has it right. There are so many different sales tax rules and interpretations from state to state that it is not possible to generalize. IMO the bottom line is that it is not smart to save a few bucks and then have to be looking over your shoulder forever, wondering if the state will catch up with you. Not only that but your poor state government needs more money!

06-25-2012 07:52 AM

Minnewaska

Re: State Registration of Documented Vessels

Generally speaking, Sales Tax is due upon sale inside a jurisdiction, like a State. However, many States have different rates by County. It is due each time a new Sale is made, except between commercial vendors when trading inventory and some State's exempt sales between individuals, under certain conditions. Use Tax is due upon using an item in the jurisdiction for a defined period of time and is typically the same rate as Sales tax. Use Tax is designed to collect an equivalent of Sales Tax, if you buy in another State and bring the item home.

How these apply to each State differs dramatically. For example, many will waive Sales Tax, if you removed the purchased property from their State within a period they define. Many will give you credit against their Use Tax, if you paid another State's Sales Tax. But, not all do this and none define it the same.

Registration is only a license to use use your boat within a jurisdictions waters for more than a defined period of time. Many States use registration as a way to determine if you've paid the appropriate Sales or Use tax.

Before anyone gets energized on trying to make sense of this, or argue about waters that flow to Ireland?, tax code isn't designed to make sense or be right or wrong. It's only designed to collect revenue. Period.

I like how a lot of people these days just go.....I'd paid it to avoid the hassle . That's what made this country great . There actually was a guy in the Continental Congress who acknowledged that the British were pesky , but it would be easier to just pay them & avoid the hassle . His name was Ima Spineless ******** ......just sayin

So you don't register you car, right tough guy?

06-25-2012 06:17 AM

saillife

Re: State Registration of Documented Vessels

Stumble,

Your avoiding what I said and the question that Tempest asked. Also you imply that what I said isn't correct but never specify what is wrong.

The state general sales and use tax is levied on the following transactions:

The sale of tangible personal property in this state.
The use, consumption, distribution, or storage for use or consumption in this state of any tangible personal property.

We agree on this - If O1 didn't pay taxes it is tax evasion.
As to O2 in this case I don't know what his liability would be for O1s' failure to pay taxes but O2 will be paying taxes on his purchase of the used boat.

Even if O1 payed sales tax, when O2 buys the boat he will have to pay taxes on his purchase.

Your numbers don't make sense. Mississippi has a 7% tax rate. On 250k that would be 17,500 in La with a 4% tax it would be $10,000.

Why Louisiana would care about sales taxes due in another state is a mystery. How much of this 30k was to go to Mississippi and how much did Louisiana want? Was the boat titled or documented?

In post #30 you say "Louisiana says well if it's here more than 90 days you need to register it in Louisiana. To do so you need proof of sales tax being paid, or will have to pay it."
Sounds like they want their tax money.

Your statement in post #28 is wrong.
"Sales tax is only due the first time a boat is sold, not every time. Just like used cars when sold from person to person are not due sales tax (they are if the title was from a used car lot though). "
The statement that a car would only have sales tax if bought from a dealer doesn't make sense and is wrong. There's a reason you always see/hear a line about "title, taxes and registration" in car ads. When you go to a DMV and try to title a car that you bought they are going to collect sales taxes if the state has a sales tax. If you buy it from a dealer who is getting your tags he will collect the taxes and other fees. As for a boat it is the same thing. The Louisiana website says nothing about 'new' or 'used' just sale of tangible property.

Like Sea hunter said sales tax is due each time an item is sold not just when it is new. When I bought my used sailboat I paid sales tax in Maryland. Since I'm the third owner and the boat has always been in Maryland it was the 3rd time Maryland collected sales tax on the boat.

If you are buying a used boat it would be smart to ask the agency that handles boat titles in the state where you plan to keep the boat what sales tax you might owe.

I was under the impression that you sell titanium, are you also a boat broker or lawyer?

06-25-2012 04:34 AM

sea_hunter

Re: State Registration of Documented Vessels

Everyone pays the sales tax once for each boat they purchase on any new or used boat; whether or not the boat is documented or as the RO one moves to a different state. Registration requirements vary state to state, however, state jurisdiction prevails as to registration and or title if the state has titled vessels. One of course can choose to avoid paying the sales tax, but in the end the somebody is going to have to turn over a pound of flesh.

06-25-2012 03:51 AM

Stumble

Re: State Registration of Documented Vessels

Sail life,

You are correct... But not quite.

Let me go through an example of a boat I just cleaned up the paperwork on...
1) Owner 1 (01) buys a boat in Louisiana
2) O1 tells Louisiana the boat will be registered in Wisconsin. So no sales tax is owed to Louisiana
3) 01 never tells Wisconsin he bought a boat so Wisconsin doesn't know they are due sales tax
4) 01 documents the vessel, thus allowing him to get a boat mortgage, and insurance. With the boat located in Louisiana, but titled in Wisconsin.
5) 01 sells the boat to owner 2 (02)
6) 02 want the boat to be legal, so he calls up Louisiana to see what he needs to do.
7) Louisiana says well if it's here more than 90 days you need to register it in Louisiana. To do so you need proof of sales tax being paid, or will have to pay it
8) since 01 never paid sales tax, 02 is stuck with a tax bill he never expected to pay
9) 02 calls me, we sue 01.
10) 01 settles for amount taxes owed
11) 02 registers the boat legally

Yes you are correct that 01 was supposed to pay the taxes, but he didn't. And with no revenue department looking for him, he was fine. Had he been caught he likely would have been subject to tax evasion charges, but he was never caught.

In reality a huge percentage of boats did this, because it was a very safe way to avoid a large tax bill. And since there was no way to check if sales tax had been paid until the boat was stopped, and you can't search a boat without probable cause... The states didn't have much to go on.

Enter our current situation.

Some states have begun to require registration even if a boat is documented. So if you don't have a sticker on your boat the officer has probable cause to investigate you for operating without registration. Since all states to my knowledge require proof of sales tax being paid to register a boat, there is now an enforcement mechanism that works. I expect more and more states (particularly costal states) to adopt this policy.

06-25-2012 03:17 AM

saillife

Re: State Registration of Documented Vessels

Stumble,
Sales tax is due when you sell a car if the state has a sales tax. You don't pay it, you don't get tags or a title. Same for a boat... It depends on the state.

06-25-2012 03:02 AM

Stumble

Re: State Registration of Documented Vessels

Sales tax is only due the first time a boat is sold, not every time. Just like used cars when sold from person to person are not due sales tax (they are if the title was from a used car lot though).

In this case the first owner should have paid sales tax but didn't, by documenting the vessel and never reporting the sale to the state in which it was documented. The second owner then got hit with a tax bill based upon the original purchase price of the boat.

There are some other complexities like the age of the boat, and if the boat was a dealer buy or private sale, ect.

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